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Building Owners Could Get Two More Years to Comply with Impending Climate Law

Under new proposed rules to Local Law 97, buildings that show a good faith effort to meet carbon caps could get a reprieve. But some backers of the law say the delay isn’t warranted.

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Smoke rises from a new residential development in Fort Greene, Brooklyn, Jan. 27, 2023.

Ben Fractenberg/THE CITY

The Department of Buildings on Tuesday answered some long standing questions about the city climate law that requires buildings to reduce their carbon emissions — less than four months before the law takes effect.

Local Law 97, passed by the City Council in 2019, puts limits on carbon on all buildings larger than 25,000 square feet, including apartments and offices.

Most building owners the law applies to must comply starting in 2024, and the emissions limits ratchet down in 2030 and 2050. Owners not in compliance could face fines of $268 for every ton of emissions above the limit.

According to new rules proposed by the DOB, building owners who make a “good faith effort” to meet the caps but don’t achieve them by the 2024 deadline may get two more years before fines hit.

For some, the leeway makes sense and will go a long way towards quelling the anxieties of building owners and co-op members around Local Law 97.

“Everyone’s talking about the fines, but there is no reason to believe any building, any property owner, who is endeavoring to make a good faith effort to comply would receive any fines whatsoever,” said Councilmember James Gennaro, chair of the Committee on Environmental Protection, Resiliency and Waterfronts. “This has to happen, and we’re trying to make this as painless as possible to get the good results all New Yorkers ultimately want.”

For others, the wiggle room signals a long-feared attempt to weaken the law and push back the benefits of greening buildings, which are the biggest source of planet-warming emissions in the city.

“They [the Adams administration] shouldn’t allow these buildings to delay,” said Alex Beauchamp, Northeast Regional Director of Food and Water Watch, which advocated for Local Law 97’s passage. “They should commit to stiff enforcement for buildings that don’t hit the emissions reductions that are required under the law.”

The DOB will hold a public hearing for feedback on the proposed rules in October. 

Good Faith Effort

While the city estimates that just 11% of buildings (about 1,500) are out of compliance with the law’s 2024 standards, 63% of buildings (about 8,800) are out of compliance with the stricter 2030 standards. Each building walks a unique pathway to comply with the law that depends on its age, state of maintenance, heating and cooling system and state of finances.

In October, when the DOB put forth the first in a series of proposed rules for the law, it floated the idea of a reprieve for property owners who are trying to slash their carbon emissions but couldn’t meet the 2024 deadline.

To demonstrate a “good faith effort” and avoid fees for two years after the initial 2024 compliance deadline, building owners must create a decarbonization plan that shows how emissions will be reduced below the limits. The plan must include a timeline and the financial details for how to follow it. Buildings may see retroactive penalties for not following through with the plan.

Daphany Rose Sanchez, executive director of Kinetic Communities Consulting, a firm focusing on energy equity, was heartened to see some guardrails included in the good faith effort qualification process, including the requirement that building owners would have to show they’ve sought permits for the work.

“Using permits to ensure good faith efforts is a good thing. That means they need to have a contractor already involved in doing the work,” Sanchez said.

And building owners that opt for a “good faith effort” exception cannot purchase renewable energy credits, or RECs, for compliance. Buying RECs, which support clean energy projects, is one way that building owners can comply with the law without actually making any changes — like installing solar panels, upgrading the boilers or improving insulation — to their buildings. 

“In our view, that’s good. If they were taking this good faith compliance pathway and purchasing RECs, it’d be double-dipping, which we don’t want to see,” said Shravanthi Kanekal, a resiliency planner at the New York City Environmental Justice Alliance, which has been pushing for limits on REC purchasing.

Kanekal still expressed concern about any “pushback periods” the city might grant out-of-compliance building owners.

But Bob Freidrich, president of Glen Oaks Village Owners Inc., a complex facing penalties for noncompliance in both 2024 and 2030, doesn’t think a two-year reprieve is enough. His co-op is one in a coalition suing the city to challenge Local Law 97.

“That is woefully insufficient. For us to comply is going to cost us $24.5 million,” he said. “We don’t have that, and we’re not going to have that in two years.”

Electrifying Heat

Another aspect of the newly proposed rules would reward buildings making progress with electrifying space or water heating — thereby transitioning away from fossil fuels — before stricter carbon emission limits kick in by 2030. 

Such efforts would not only reduce carbon emissions quicker, but result in local air quality benefits, Gennaro pointed out.

As part of a wider plan to educate building owners and help them achieve their carbon emission reductions, the Adams administration will go after federal and state sources of funding, including tax credits through the Inflation Reduction Act.

“Complying with Local Law 97 will require serious effort,” said Chief Climate Officer and Department of Environmental Protection Commissioner Rohit Aggarwala in a statement, “and we can get it done in partnership with the state, utilities, building owners, and more.”

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